UK citizens already poorer as a result of Brexit, study finds

Brexit has already started to make UK citizens poorer and more pain is likely in the months and years to come, a new study has warned.

Although last year's vote to quit the EU has had "no obvious effect" on GDP growth, the collapse in the value of the pound - down 13% against the US dollar and 9% against the euro by the end of last month - has fuelled a surge in inflation from 0.5% to 2.7% and a fall in real wage growth from 1.3% to minus-0.5%, the report from the London School of Economics Centre for Economic Performance found.

And leaving the EU without a new trade deal - as Prime Minister Theresa May has threatened - would be the "worst-case scenario" for the UK economy, adding to the country's woes by cutting trade and GDP, the report said.

The study cited research suggesting a "no deal" outcome to withdrawal negotiations would reduce national income per head of population by 2.6% over 10 years, the equivalent of £1,890 per household.

The impact on the UK economy would be twice as damaging as the least painful post-Brexit arrangement of Norway-style non-EU membership of the single market, which would limit the cut in per capita income to 1.3%.

Mrs May has ruled out single market membership and insists she is ready to walk away from negotiations without agreement, declaring that "no deal is better than a bad deal". Labour has ruled out a "no deal" result and says it is hoping to keep the benefits of the single market while ending free movement - a scenario explicitly rejected by Brussels.

The CEP report acknowledged that in theory "a sufficiently bad deal must be worse than no deal", but added: "In practice, the no-deal outcome, where the UK and EU trade under World Trade Organization terms, is the worst-case scenario for the UK economy."

Even if the UK unilaterally removed all import tariffs as part of a move to WTO rules, as some Brexiteers have advocated, it would only reduce the cost of Brexit by 0.3 percentage points, leaving the overall effect negative.

Co-author Thomas Sampson said: "Prime Minister May's decision to leave the single market was not an inevitable consequence of the referendum and will increase the economic costs of Brexit.

"The Brexit vote has already hurt the UK by reducing real wage growth. More pain is likely in the months and years to come.

"Both the Conservatives and Labour have chosen to prioritise taking back control over making Brexit work for the UK's economy. Inevitably, this choice is bad for living standards."

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